Venture fund managers, limited partners (LPs) and founders all want the same thing: a trusted, steady hand, and a partner they can trust to navigate effectively through the market’s inevitable ups and downs.
Yet, despite this singular focus, there’s no single path to becoming a successful fund manager. Top-performing funds have been built by everyone from experienced operators, consultants and venture capital (VC) associates to investment bankers, academics, athletes and even celebrity DJs.
However, there is one thing that nearly all successful managers do have in common: Before they could invest out of their first institutional fund, they had to convince a set of LPs to give them money. And often, they had to do it without a decade-long investing track record.
At this early stage, LP pitches need to be deeply personal. A manager must capture LPs’ imagination and persuade them they are getting in on the ground floor of the next great venture fund — one they can trust in both up and down markets, even when there isn’t a lot of data to prove it. As a result, the pitch must clearly demonstrate how a manager’s unique background, thesis, network, diligence capability or skill set will translate to outsized returns.
Over the past eight years, we have worked with dozens of fund managers to develop their fundraising narratives and translate them into compelling and memorable pitches. And if we have learned anything over that time, it’s that no two managers are alike. They each come to the table with a unique background and perspective.
Still, over the years we’ve noticed there are a handful of “archetypes” that account for most successful managers. In fact, every single successful manager we have worked with fits squarely into at least one of these categories.
These archetypes are useful in several ways. For emerging managers, identifying their archetype can help to clarify their competitive set, their differentiation in the market and who they may want to target as LPs. However, it’s also quite useful in developing a pitch. Understanding how LPs are likely to perceive managers — and what they’ll be expected to prove — can be a great first step in building out a story and crafting a pitch.
The 5 Emerging Manager Archetypes and the Stories They Tell
Below are the five most common manager archetypes that we see. They’re presented in no particular order — we’ve seen successful managers emerge from each of these categories.
For each archetype, we’ll share a brief description of the types of managers who typically fit that model, as well as the unique challenges they face in telling their stories to investors. We’ll also share the questions or concerns that investors are likely to have about emerging managers of this kind.
From there, we’ll lay out the key “beats” of each archetype’s pitch. These beats are common across all archetypes — “What have I built?”, “What have I proven?” and “What is my plan?” — but the answers vary greatly among them.
Finally, to provide a sense of how these stories play out, we’ve developed sample abbreviated presentations for each archetype. The pitches are not meant to serve as templates, but rather as tools to help managers begin mapping out their own story.
1. The Super-Networker
An investor, operator, consultant or practitioner who has built a powerful network and has proven that this network creates value.
The Super-Networker is often an extrovert who thrives on building relationships and making connections. They win access to deals because they know the person who knows the person who knows the person who started the company. When they meet a founder, it turns out they’re friends with many of the same people, they’ve worked with many of the same colleagues, and they know just the person the founder should meet to get advice on the biggest challenge they are facing.
The Super-Networker is often not a traditional venture capitalist. Their biggest asset is not their portfolio, but rather their network. The Super-Networker needs to convince LPs that this network is so valuable that it can be leveraged for proprietary deal sourcing, unique access to great deals and comprehensive network-based diligence. As a result, their pitch must tell the following story:
- I have built an impressive network throughout my career
- I have proven that this network can be leveraged effectively (angel investments, board seats, referrals of senior executives, etc.)
- I have a plan to use my network to create proprietary deal flow and win access to great deals
2. The Subject Matter Expert
An investor, operator, consultant or academic who has developed unique expertise in a particular vertical, technology or geographic area with the potential to drive strong returns.
The Subject Matter Expert has spent decades in their field. They’ve seen startups come and go and has built strong relationships with all the major players. The Subject Matter Expert knows what’s needed in their market, how to find the person building it and what that individual will need to be successful. They can overwhelm you — and sometimes bore you — with their granular knowledge of the technology, companies and personalities in their field. Nevertheless, that’s what makes the Subject Matter Expert so special.
The Subject Matter Expert has a unique challenge when it comes time to pitch. They must convince LPs that:
- Their focus area is big enough to support a standalone fund.
- They are in the best position to identify and win access to the best startups in that area.
- They can also beat out the best generalist funds.
This is both an offensive and defensive pitch, and it requires the Subject Matter Expert to hit all the following beats:
- I have built unique insights and relationships in a particular market or vertical that presents a massive opportunity (Latin America, the supply chain, crypto, etc.)
- I have proven that these insights and relationships are considered valuable by founders who operate in that market or vertical
- I have a plan to build unique sourcing, diligence and deal mechanics using their expertise
3. The Blue Chipper
An investor at a reputable fund who wants to strike out on their own to pursue a unique strategy, invest in a particular sector or theme or back non-traditional founders.
The Blue Chipper was seen as the “golden child” at their previous fund. They have led — or at least sourced and performed due diligence on — some of the fund’s most high-profile investments. And the Blue Chipper has innovated and heavily influenced the way the enterprise operated. They also had an itch that just couldn’t be scratched within the confines of a traditional operation. They knew their colleagues couldn’t move fast enough, go deep enough or be daring enough to achieve the fund’s full promise.
The Blue Chipper has a big job ahead of them. First, they must show they were successful at a traditional fund — often without having permission to take credit for specific deals — while also arguing that they have not yet fulfilled their potential. They also must convince LPs that they are ready to make the transition from star player to coach, manager and captain.
This is a nuanced pitch that often requires the following elements:
- I built a track record and a network at a blue-chip fund — and learned from the best
- I have proven that I recognized an opportunity that could not be pursued within an existing fund
- I have a plan to invest in a differentiated way
4. The Deep Thinker
A thesis-driven investor with a compelling vision of where the world is headed and how to find the companies that will take us there.
The Deep Thinker is an outsider. They are engaged enough to see how the world works today but detached enough to reinvent it from the inside out. They question everything, from the choices traditional VC investors make to the way they make them. They see a massive gap in the market and has the right makeup — and the right plan — to exploit it. They know how to find companies, structure deals or leverage data in a way that’s never been done before.
When pitching, the Deep Thinker must ride the thin line between radical and practical. In a sea of LP pitches, they must clear an incredibly high bar to stand out as a unique thinker. And even if they do, they must also offer LPs the assurance they won’t live in the clouds. The Deep Thinker must prove that their unique perspective lends itself to a unique operating model, which in turn lends itself to better sourcing, diligence and access. And that means telling a story like this:
- I have built a unique perspective on a particular market or venture more broadly
- I can articulate how this perspective translates to a one-of-a-kind operating model, approach or portfolio
- I have a plan to source companies and structure deals to capitalize on that perspective
5. The Practitioner
An operator, consultant or expert with a skill set so unusual that founders would happily offer equity in exchange for access to this expertise.
The Practitioner has a unique skill set that commands a significant premium — and it’s a skill set that the best startups desperately want or need. The founders they have worked with rave about them and have begged them to join their teams. The Practitioner has built a sterling reputation that has allowed them to pick their clients, set their own price and become Silicon Valley’s “go-to” provider for their service.
The Practitioner rarely has a traditional investing background. In fact, they may not have any portfolio to speak of. As a result, they need to look elsewhere for evidence that will give founders confidence in the value of their service and a willingness to trade equity to get it. They also need to prove that their unique skill set scales at least enough to allow them to build a portfolio capable of generating returns without getting distracted with other consultancy engagements or portfolio support services.
One of the trickiest stories to tell, it typically must hit these notes:
- I have built the skills or network to provide a unique, coveted and useful service to founders
- I have proven that founders will trade equity for access to this service
- I have a plan to formalize and deliver this service at scale
Putting it All Together
Convincing LPs to invest in a new venture fund requires a lot of work. Then again fund managers who know their archetype have a leg up when forming an investor pitch that hits all the right notes — and brings in the funding they need.